Aviva Investors assets rise £44bn on Friends Life deal

Aviva-building-logo-2013-700x450.jpgAviva Investors has seen its assets increase by £44bn to £289.9bn following the acquisition of Friends Life, but was hit by outflows last year.

The asset management arm of Aviva saw a £54.1bn rise in assets as a result of acquisitions in 2015. However, the firm was also hit by outflows from funds.

The firm’s 2015 results, released today, show gross outflows reached £28.3bn for the business across the year, for both internal and external clients. The group saw gross sales of £23.2bn over the period, with the bulk coming from internal sales, at £17.2bn.

Adverse market movements also hit assets at the division, seeing a £4.9bn hit to funds.

However, Gars rival the Aviva Investors multi-strategy AIMS range saw £1bn of net inflows from external clients in 2015, taking assets to £3bn.

“Acquisitions in 2015 include £22.3bn of assets managed by Friends Life Investment at acquisition, £22.8bn of Friends Life assets transitioned to Aviva Investors, and £9bn from the transfer of our real estate finance and French real estate businesses,” says the company in its results.

Operating profits at the asset management arm surged 33 per cent year-on-year, from £79m to £105m. This included a £9m contribution from Friends Life Investments.

Aviva says the profit rise is an “important milestone” but adds it is “still early days” for the business. Last year Aviva described the profit delivered by its fund management business as “inadequate”.

At a group level the Friends Life acquisition saw profits at the insurer rocket 37 per cent last year, with the firm’s cost-cutting target set to be hit a year ahead of schedule.

Aviva’s annual results, published this morning, reveal profits in the UK Life business rose from just over £1bn in 2014 to over £1.4bn last year. Excluding the contribution made by Friends Life, profits were up just 2 per cent.

Both the 2015 and 2014 profit figures were skewed by non-recurring events which boosted the underlying profit figure. When these are stripped out, year-on-year profits rose 6 per cent.

The integration of Friends Life has “gone faster and better than expected”, Aviva chief executive Mark Wilson says.

As a result, the insurer expects to meet its target of £225m in annual cost savings in 2016, a year ahead earlier than planned.